The Crisis of the Early 21st Century: General Interpretation, Recent Developments, and Perspectives

Gerard Dumenil, Dominique Levy

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Abstract

The current crisis is analyzed as a crisis of “neoliberalism,” a social order established in
the wake of the structural crisis of the 1970s, to the benefit of upper classes, that is, capitalist and
managerial classes. The crisis was the expression of the inner contradictions of this social order.
On the one hand, the quest for high income on the part of these classes led to the extraordinary
expansion of financial mechanisms and globalization. On the other hand, the US macroeconomy
followed an unsustainable trajectory of disequilibrium (as the deficit of foreign trade). This fragile
trajectory was destabilized by the subprime crisis. Credit and demand policies were conducted.
The crisis entered into a second phase whose main feature was the crisis of sovereign debt. The
action (quantitative easing) of the Federal Reserve was spectacular in the United States. In Europe
the lack of governance and solidarity slowed down the bailout of the most affected economies,
but the consequences on the rate of exchange of the euro remained very limited. The crisis will
be long in the old world, though the “national factor” in the United States, confronted with the
loss of its international hegemony, could stimulate much more active policies. Many countries in
the periphery are now growing more rapidly, defining a new international configuration.
Original languageEnglish
Pages (from-to)562-580
Number of pages19
JournalWorld Review of Political Economy
Volume2
Issue number2
Publication statusPublished - 2011
Externally publishedYes

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interpretation
social order
credit policy
structural crisis
demand-oriented economic policy
foreign trade
upper class
rate of exchange
Euro
neoliberalism
hegemony
solidarity
indebtedness
deficit
globalization
governance
income
economy
lack

Keywords

  • crisis
  • sovereign debt
  • neoliberalism
  • capitalist classes
  • managerial classes

Cite this

The Crisis of the Early 21st Century: General Interpretation, Recent Developments, and Perspectives. / Dumenil, Gerard; Levy, Dominique.

In: World Review of Political Economy, Vol. 2, No. 2, 2011, p. 562-580.

Research output: Contribution to journalArticle

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